Are you waiting out the real estate market, sitting on the sidelines just watching and waiting? Are you trying to figure out when apartment prices are going to hit bottom and start rising again? What about interest rates? Will they still be at historic lows when the real estate market picks up again? Instead of just waiting, you could be using, this time, to get ready so that you’ll have everything in place when you decide that it’s time to make your move. Buying an apartment is a complicated especially if we talk about Birmingham AL apartments, time-consuming process, and full of snags and hurdles, some of which could prevent you from buying. Now is the ideal time to find out what roadblocks you might face and get them out of your way.
Qualifying for the mortgage is by far the most difficult part of buying an apartment. There are things you can do now to greatly increase your chances of getting a loan when you’re ready.
Clean up your credit. Get a copy of your credit report from each of the three major credit reporting agencies. If you’re willing to pay a fee, there are many services that will do this for you. However, if you contact the credit reporting agencies directly they’ll give you a copy of your credit report for free. Get copies of credit reports for yourself and your spouse, or whoever you’re planning to buy a house with.
Review your credit report for errors. If there is any incorrect information on a report, write a letter to the credit reporting agency explaining that the information is incorrect. There is an established protocol where they contact the creditor for a response. Get started now because this process takes time. It’s important to do this with all three credit reporting agencies. You never know which one your mortgage lender is going to use. Some require credit reports from all three.
If you are behind on any payments, now is the time to fix that. Catch up any delinquent loans and make sure that you pay all of your bills on time. If there is a blemish on your record, it will count for less as it ages. Going forward, make sure that your payment history is spotless.
Decrease the balances of existing accounts, especially revolving lines of credit, like credit cards. And don’t open any new accounts. Even if you pay everything on time, it will look bad if you have too many loans. If you’re thinking of buying a car, wait until after you’ve bought your house. Car loans are much easier to get than apartment loans.
You’ll need a solid employment history to qualify for an apartment loan. Lenders look for stable earnings, which usually means steady employment, in the same field for two years or more. If you have plans to make any major changes – like switching careers or going into business for yourself – you might want to wait. It’s okay to switch from one employer to another, as long as you’re working in the same field.
Save up for a down payment and closing costs. You’ll probably need to talk to a mortgage broker or do some research online to figure out how much money you need to save. Most people want to buy the most house that they can afford. When you find out what kind of payments you can qualify for, then you’ll know what price range of house you’re looking at. Also, the percentage of the purchase price that you’ll need for a down payment can vary widely depending on the type of loan you’re getting. FHA loans, for example, allow you to put as little as 3.5% of the purchase price down. Closing costs will run about 3% of the apartment’s purchase price. You may be able to negotiate with the seller of the apartment to have them pay some or all of your closing costs, especially if you buy a brand new apartment from the builder.